Dirty Data Muddying Value Analysis

Dirty Data Muddying Value AnalysisPart One of a two-part series

Your item-master data not only supplies critical information you need for daily procurement and accounts payable activities, it’s also the starting point for your value analysis efforts. But your “source of truth” may not be so truthful.

The fact is 30% to 40% of buyer systems are inaccurate.[i] With hospital item-master files ranging from 18,000 to 100,000+ items,[ii] that translates into thousands of incorrect, duplicate or missing item descriptions.

It’s not that your item master means to lie to you — it literally can’t help itself:

  • 10 million US med-surg product listings change every year[iii]
  • Each GPO makes up to 30,000 contract data changes each month
  • Cryptic, annotated descriptions make items hard to recognize
  • Diverse users in disparate locations cause multiple listings for the same product
  • 40% to 50% of your purchases are non-catalog and aren’t captured in your item master

An unclean and incomplete item master prevents users from easily finding the product they need, leading to them mistakenly ordering the wrong thing or buying off-catalog. Whether intentional or not, off-catalog purchases are usually off-price/off-contract because you don’t see them until after they’re made.

Bad data and missing purchases both throw a wrench into your value analysis efforts. How can you effectively standardize product selection and consolidate contracts if you don’t realize you have five iterations of the same product and half your purchase data is missing?

Today’s cloud-based, preemptive formulary guided procurement systems help you clean up your act on both fronts, maximizing your technology spend.

First, strategic sourcing systems help ensure your data stays clean. They use a cloud-based virtual item master (VIM) and artificial intelligence (AI) to normalize your item-master data against your contract data and purchase history, as well as industry data sources, to create a single source of truth that is perpetually updated (no more need to outsource data cleansing). Using AI and expanded descriptive fields, these systems capture and recognize disparate listings as the same product. Standardization becomes easier and more consistent, and your staff can finally source products with descriptions they understand and names they use.

Second, these systems capture those illusive non-catalog purchases, so your value analysis team members gain visibility into your total spend. The team receives detailed comparison data it can use to make standardization recommendations and negotiate with physicians and vendors. Because these systems automatically present standardization opportunities based on functional similarity and equivalence, your team can focus on the initiatives that offer the best potential return — before they even begin.

Third, preemptive formulary guided procurement systems automatically reinforce value-analysis efforts on a daily basis. Users are empowered to make the right choice — on formulary, on price, on contract — at the point of requisition. They are even shown the savings.

Having clean data and capturing your off-contract spend helps you streamline your value analysis efforts to get a greater return. And that supports your ultimate business goals of increasing efficiency and savings.

Learn more about perpetually cleansing your item master by downloading our new white paper or subscribing to our blog.


[i] Global Data Synchronization Network, Current Facts About Data Synchronization; AHRMM Website; accessed 3/14/2012; and Why the Item Master is the Center of Your Universe; Global Healthcare Exchange (GHX) white paper; 2013.

[ii] John Cashmore; “The Value of Cleansing Data”; Materials Management in Healthcare; 2005.

[iii] Why the Item Master is the Center of Your Universe; Global Healthcare Exchange (GHX) white paper; 2013.